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If you decide to create a mobile bank, then you need to immediately decide on a medium-term business development strategy.
At the top level, I would single out two main areas: market share and financial results. Let's talk about this in more detail.
1. Hype to mobile banks.
In our country, such projects are gaining popularity, however, there are only a few living banks that attract clients, build up credit and savings portfolios, develop their product and conduct active marketing. Most often these are just announcements, intentions and statements.
I would like to note that there is a large infrastructure around mobile banks:
Why are there few working mobile banks in Ukraine? After all, monobank entered the market back in 2017 and so much is said about its success to this day.
It is important to understand that in the implementation of such projects, expertise in retail banking is important. Therefore, I do not believe in the implementation of a successful project by IT specialists, telecoms or other retailers. I don’t believe in the design when a classic bank unsuccessful in retail buys a white label solution and makes a cool mobile bank.
We understand that there are only a few successful retail classical banks in Ukraine. Moreover, most of them have either already been withdrawn from the market, or have changed owners and priorities. I would classify Privatbank, Delta, Fido, Mikhailovsky, BRS (Forward), Alpha, Platinum and Idea among such banks. By the way, the last two banks did not have a strong card business, specializing in cash loans.
Therefore, the implementation of successful mobile banks should be expected primarily from specialists from the above projects. But not everyone managed to save their teams after the bankruptcy: therefore, the list of applicants is even smaller.
For a successful launch of a mobile bank, the stars must converge on a number of other aspects - investors, partner bank, software development, etc. This raises the threshold for entering this market.
2. Mobile banking is not a classic bank.
The second important aspect is that you make plans for the development of a mobile bank business based on your knowledge, experience and accumulated statistics in a classic bank. And here many will be disappointed, because the business model of a mobile bank is different from the classic one.
The absence of expenses for a regional physical network does not make opening a mobile bank easier or cheaper. You will have other costs equal to the cost of maintaining the departments. First of all, this is the need for qualified personnel, a strong development team, as well as a large staff of customer support and logistics. Also, do not forget about payroll, marketing budget, the need for additional bonuses for clients (cashback, special offers, etc.).
Now a few words about the costs associated with customer operations:
All these factors strongly influence the P&L of the project, and you will learn about them from your mistakes, which cost time and money. Yes, they don't write about this in books yet, so you have to stuff the bumps yourself
3. Growth strategy - market share or financial result.
Customer acquisition (marketing) costs money. Depending on whether it is a credit or debit client, the amount varies from $ 10 to $ 30 or more for a issued card. And this is an assessment of performance tools only, without media allocation, coverage tools, and the cost of brand awareness.
Operational support for onboarding and issuing cards also costs money. This is the verification of documents and information, communication with the client at all stages of the funnel, making a loan decision, printing documents and delivering a card. Finally, the card itself is plastic with packaging. Here, the price tag starts at $ 10 per customer.
Next, work begins with the client on engagement, activation, reactivation, etc., as well as the work of the support service. Each active client generates costs on a monthly basis: processing, MPS, commission for acquiring and P2P, card replenishment in terminals (PTC), cash withdrawals from ATMs (ATMs), usually strangers, etc. However, not every active client brings income - interest on loans, interchange for purchases, other types of bank income.
Thus, when choosing a growth strategy, you need to clearly decide which path to go. For example, the first few years we are investing in customer acquisition in order to work later on economies of scale (“put it on a Privat card”, low cost of internal transfers, cheap acquiring due to a large share of our cards, etc.). The introduction of small paid services (insurance, for example) on a large scale immediately generates significant income, the validity of national advertising campaigns and the effectiveness of marketing in general increase.
Or we set the main goal to break even and payback. Then the growth should be rational, every step should be verified, the economic feasibility of any action should be taken into account, the emphasis on performance tools in marketing, increased profitability (cost reduction) for each operation, a decrease in the share of debit clients in the portfolio, and so on.
This strategy will lead you to make money faster in the medium term, but gain less market share and, most likely, a weaker position in the long term. Although it all depends on the margin of safety and expectations. As a result, you can get a mobile bank with 1 million active high-quality clients and good P&L indicators.
As a result of the emergence of new players on the market, the consumer will win in any case. After all, the more offers, the higher the competition, the more technologically advanced and modern the products, the better and more affordable services our clients receive.
At the top level, I would single out two main areas: market share and financial results. Let's talk about this in more detail.
1. Hype to mobile banks.
In our country, such projects are gaining popularity, however, there are only a few living banks that attract clients, build up credit and savings portfolios, develop their product and conduct active marketing. Most often these are just announcements, intentions and statements.
I would like to note that there is a large infrastructure around mobile banks:
- companies offering software development, white label solutions, integrations;
- operating companies - logistics, call centers, etc.
- companies providing risk management services - decision making, analytics, collection;
- PSP providers - payments, transfers and so on.
Why are there few working mobile banks in Ukraine? After all, monobank entered the market back in 2017 and so much is said about its success to this day.
It is important to understand that in the implementation of such projects, expertise in retail banking is important. Therefore, I do not believe in the implementation of a successful project by IT specialists, telecoms or other retailers. I don’t believe in the design when a classic bank unsuccessful in retail buys a white label solution and makes a cool mobile bank.
We understand that there are only a few successful retail classical banks in Ukraine. Moreover, most of them have either already been withdrawn from the market, or have changed owners and priorities. I would classify Privatbank, Delta, Fido, Mikhailovsky, BRS (Forward), Alpha, Platinum and Idea among such banks. By the way, the last two banks did not have a strong card business, specializing in cash loans.
Therefore, the implementation of successful mobile banks should be expected primarily from specialists from the above projects. But not everyone managed to save their teams after the bankruptcy: therefore, the list of applicants is even smaller.
For a successful launch of a mobile bank, the stars must converge on a number of other aspects - investors, partner bank, software development, etc. This raises the threshold for entering this market.
2. Mobile banking is not a classic bank.
The second important aspect is that you make plans for the development of a mobile bank business based on your knowledge, experience and accumulated statistics in a classic bank. And here many will be disappointed, because the business model of a mobile bank is different from the classic one.
The absence of expenses for a regional physical network does not make opening a mobile bank easier or cheaper. You will have other costs equal to the cost of maintaining the departments. First of all, this is the need for qualified personnel, a strong development team, as well as a large staff of customer support and logistics. Also, do not forget about payroll, marketing budget, the need for additional bonuses for clients (cashback, special offers, etc.).
Now a few words about the costs associated with customer operations:
- high transactional activity, which generates high operational costs;
- another structure of transactions that reduces the expected fee and commission income;
- different ratios of debit / credit cards in the portfolio, since the client receives a credit decision when registering a card at later stages of onboarding. Meanwhile, in a classic bank, having received a loan refusal, being next to the bank's manager, the client, as a rule, does not continue to issue a card "with zero".
All these factors strongly influence the P&L of the project, and you will learn about them from your mistakes, which cost time and money. Yes, they don't write about this in books yet, so you have to stuff the bumps yourself
3. Growth strategy - market share or financial result.
Customer acquisition (marketing) costs money. Depending on whether it is a credit or debit client, the amount varies from $ 10 to $ 30 or more for a issued card. And this is an assessment of performance tools only, without media allocation, coverage tools, and the cost of brand awareness.
Operational support for onboarding and issuing cards also costs money. This is the verification of documents and information, communication with the client at all stages of the funnel, making a loan decision, printing documents and delivering a card. Finally, the card itself is plastic with packaging. Here, the price tag starts at $ 10 per customer.
Next, work begins with the client on engagement, activation, reactivation, etc., as well as the work of the support service. Each active client generates costs on a monthly basis: processing, MPS, commission for acquiring and P2P, card replenishment in terminals (PTC), cash withdrawals from ATMs (ATMs), usually strangers, etc. However, not every active client brings income - interest on loans, interchange for purchases, other types of bank income.
Thus, when choosing a growth strategy, you need to clearly decide which path to go. For example, the first few years we are investing in customer acquisition in order to work later on economies of scale (“put it on a Privat card”, low cost of internal transfers, cheap acquiring due to a large share of our cards, etc.). The introduction of small paid services (insurance, for example) on a large scale immediately generates significant income, the validity of national advertising campaigns and the effectiveness of marketing in general increase.
Or we set the main goal to break even and payback. Then the growth should be rational, every step should be verified, the economic feasibility of any action should be taken into account, the emphasis on performance tools in marketing, increased profitability (cost reduction) for each operation, a decrease in the share of debit clients in the portfolio, and so on.
This strategy will lead you to make money faster in the medium term, but gain less market share and, most likely, a weaker position in the long term. Although it all depends on the margin of safety and expectations. As a result, you can get a mobile bank with 1 million active high-quality clients and good P&L indicators.
As a result of the emergence of new players on the market, the consumer will win in any case. After all, the more offers, the higher the competition, the more technologically advanced and modern the products, the better and more affordable services our clients receive.
